Specialist restructuring firm Hilco has followed up on its January acquisition of HMV’s debt by acquiring the business and certain assets.
High street entertainment retailer has secured the future of its 141 stores and 2,500 employees by securing a rescue deal with Hilco.
Back in January, Hilco announced that it had bought HMV’s debt from its lenders, but had not purchased the business itself. It said back then that there was a ‘viable underlying HMV business’ and intended to work with administrators Deloitte to buy the company.
HMV first encountered trouble at the beginning of 2013 when it became the second retail chain to go into administration in the first two weeks of the year after photography chain Jessops.
The business, which sells CDs, DVDs and video games, said that as a result of ‘current market trading conditions’ it faced ‘material uncertainties’ meaning that it would likely not be able to meet with banking covenants at the end of the month.
It had unloaded a number of its assets in 2012 including its live music division, which was snapped up by LDC by way of a £7.3 million buy-out. The previous year it sold struggling books retailer Waterstones to A&NN Capital Fund Management for £52 million.
Paul McGowan, CEO of Hilco, comments, ‘We have spent a number of weeks negotiating revised terms with landlords and the key suppliers of the business, all of whom have been supportive of our plans to maintain an entertainment retailer on the high street.’
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Hilco now aims to replicate what it has already done with the Canadian HMV business, which it bought two years ago.
McGowan explains, ‘The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business but we believe it has a successful future ahead of hit.’
The HMV UK business will initially be led by a Hilco team working alongside existing management. The Hilco team will be led by Ian Topping, formerly chief executive of the Steinhoff Group in the UK, and Henry Foster, an investment director at Hilco. McGowan will take up the role of chairman of the new business.
Topping says, ‘We intend to reverse the earlier decisions to sell tablets and other devices in the stores and to reclaim the space for an enhanced music and visual range.
‘The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that.’